The past few years have been a period of acute difficulty and downturn for the hospitality sector. The pandemic strained and even shut down restaurants, bars and cafes around the globe, with some estimating that two years of COVID have done £115bn damage to the hospitality industry in the U.K. alone.
With lockdown restrictions finally lifted across many parts of the world, last year should have been a welcome turnaround for hospitality business owners. Businesses were in need of a chance to lift themselves back up after a difficult period, to settle and build loyalty and even expand. The reality, however, was less rosy, as the pandemic was replaced by another crisis.
With prices skyrocketing today and cost-of-living crises unfolding across many nations, anxiety is undoubtedly impacting the way that consumers part with their money, which in turn has a profound effect on trade. Rising food and energy bill prices are pushing inflation to a 41-year high in the U.K., and as a result, consumers seem to be collectively holding their breath.
Looking ahead, it’s easy to predict another year of stuttering and stunted growth, with many businesses struggling to make ends meet, or potentially even shutting their doors forever. But this doesn’t have to be the case. During this period of economic uncertainty, businesses need to look for ways to stay on the pulse and find opportunities for growth, despite the profound challenges.
Hospitality entrepreneurs can still make this year one of prosperity and growth if they are bold, innovative and open-minded. There are tools and techniques at their disposal that will help them to stand out from the crowd, access segments they’ve previously missed and develop customer loyalty to see them through the downturn in consumer spending.
With this in mind, there are four trends that I think will draw the most attention and make the biggest impact in 2023. Watch this space.
1. Convenience, engagement and the ‘attention economy’
Given the rising popularity of delivery aggregators like Deliveroo and Just Eat, hospitality businesses have a harder task today of standing out from the crowd of their competitors. The so-called ‘attention economy’ is an area that I suspect will grow more and more important to decision-makers. In the coming year, hospitality brands would be best suited to seeking ways to strategically hold and capture the attention of their customers in order to thrive.
The enduring demand for food delivery apps proves that consumers value convenience highly, which means that brands still lacking a fortified digital presence and capacity will be missing out on a sizeable market. Brands can and should invest in creating user-friendly platforms, including websites that are optimized for functionality and a smooth user experience.
Behind this trend will be two key factors – data and branding. Businesses simply cannot afford to miss out on the visibility and stickiness that these both bring to their offering, so driving their online presence with a data-driven branding approach is vital.
Due to a variety of options, these digital strategies must be designed to hold the attention of consumers, whether in terms of how the menus are laid out, tracking users’ purchasing habits and providing customized offers and notifications to drive engagement.
At its base level though, engagement can be driven by measures as simple as taking high-quality photographs of menu items and having them described in detail for a clearer offering. By any means necessary, businesses will have to make the user experience as convenient, personalized and engaging as possible.
2. Variety, range and virtual brands
As consumer spending reduces, maintaining or even increasing revenues becomes more challenging. The same customer base cannot be expected to maintain their spending, so businesses will have to push to attract more customers to maintain or increase revenues. While the above trend of driving engagement directly will likely prove popular, delivery franchising through virtual brands is set to explode.
Virtual brands – in this case, delivery-only food brands that operate exclusively on delivery aggregators – have been a source of growth and additional revenues for many in recent years, despite the general industry downturn. They allow existing hospitality businesses to augment their order volumes with a range of tactics. For instance, they offer an entirely separate food brand from within their premises, maximizing the output of their facilities and allowing them to engage with more consumers.
Being able to respond to popular demand is vital for any business. However, due to the fast pace and unpredictability of food trends, many brands aren’t able to augment their offering to keep up. Virtual brands offer ultimate flexibility to businesses. This adaptability lies in how they provide businesses with a secondary offering that can keep pace with changing tastes. Seasonal trends, viral dishes, and hot-topic cuisines are within reach of any business with a kitchen and a virtual brand partner that’s up to the task.
Delivery franchising through virtual brands has a proven track record of increasing order volumes and revenues. Our partner businesses brands have reported an increase of between £12,103 – £57,687 in additional income each month since adopting a virtual brand, making it convincing to assume that this trend will grow in popularity as consumer spending inevitably shrinks.
3. Pop-ups, promotions and the elusive word-of-mouth
As trade slows down, business owners will embrace any and all methods of self-promotion to keep commerce moving, so from traditional advertising to wild marketing stunts, we can expect to see businesses doing everything they can to be in the limelight this year.
Pop-up events are an incredibly popular means of getting the word out about one’s product or service, especially when these temporary events offer interesting freebies or other benefits are offered. Word of mouth and organic reputation building remain powerful tools, and eye-catching events like these help businesses to stand out in a crowded sector.
During an economic crisis, it pays to be associated with value and low prices, so heavy promotions and loyalty bonuses will come to the fore. Savvy consumers will actively seek out the best savings, so regularly providing appealing offers will draw the right kind of attention to a food brand – even though this is not cheap to deliver.
Assessing and acting upon the significant public appetite for deals, promotions and samples is also a brilliant way to increase social media engagement, helping to gain followers and expand an audience of consumers.
4. Businesses will face more pressure on sustainability
Brands must be aware of the ways in which they can be more intentional about food waste and their sustainable business models in general. Companies that throw away all their food at the end of the day without considering donations are routinely critiqued and face a backlash from activists, but platforms like Olio and Too Good To Go can help businesses to outsource the execution of sustainability efforts, while contributing something worthy to the cause.
It will be crucial for businesses in 2023 to articulate their sustainability efforts online in meaningful ways, spotlighting initiatives and solid efforts. However, businesses must be weary of potentially greenwashing and overplaying their environmental efforts. Greenwashing involves groups misrepresenting, exaggerating, or deceiving the public about the sustainability of their business practices, in a bid to improve their public image.
Bound for a year of (some) opportunity
Ultimately, it’s clear that hospitality is under a variety of unique pressures in these times of economic speculation and fast-paced financial shifts on the global stage, but use of innovation and technology will enhance the revenue of businesses and enable them to better understand their customers.
Just as 2022 presented a multitude of obstacles and opportunities in the world of business, looking towards 2023 businesses would be well advised to outline new targets and goals as they move forward.
Keeping ideas of sustainability, consumer wants, marketing and virtual brands in mind, food businesses can gear up to deliver their knowledge of the cultural and economic mood to their customers.
Key takeaways for hospitality:
- ‘Attention economy’ continues to soar
- Convenience and customer experience are king
- Data-driven branding crucial for visibility
- Virtual kitchens are proven to increase both growth and spend
- Eye-catching events enable businesses to stand out from competitors
- Promotions and loyalty bonuses help organic growth
- Authentic sustainability efforts are crucial, but beware of greenwashing!
Sam Martin is the co-founder and COO of Peckwater Brands (PWB), the delivery franchising experts. PWB helps restaurants and kitchens of all sizes benefit from the fullest demands of the market by streamlining the process of embracing virtual brands and multiple-franchise solutions. Sam worked in executive positions at Uber and Amazon before co-founding PWB in 2019.